Do the right thing: Part II

It’s been over two years since I was last here – this is the long-awaited sequel, if you will.

With the release of Wicked: For Good next month, it’s the season of sequels.

So, it’s only right that mine happens now.

Much like you’d expect in a sequel, the plot may change, but the through line remains.

And that through line is the importance of doing the right thing.

Last time I was here, I spoke of how doing the right thing isn’t a slogan, but a standard.

Of how it should underpin every decision, response and relationship in the financial services sector – whether somebody is watching or not.

But especially when they’re not.

Those are the actions that shine a light on who we really are.

In many cases, the right thing is subjective.

But when it comes to the financial services sector, it’s pretty cut and dried.

What does doing the right thing look like?

For firms, doing the right thing means holding yourselves to high standards.

Recognising when something has gone wrong, taking responsibility for it, and taking the necessary steps to fix things.

That includes paying redress to those you’ve harmed.

Co-operating with the FCA to ensure it won’t happen again.

And being open and honest with us, rather than trying to muddy the waters and keep us from doing our job.

Simply put, doing the right thing is about keeping your side of the street clean.

But we need to keep ours clean, too – and you can rest assured we’re doing exactly that.

The FCA's approach to doing the right thing

While we are taking a new approach to our enforcement cases, the through lines remain the same.

We are holding firms and ourselves to high standards and rewarding those who do the same.

We are conducting fewer investigations, faster.

When I was here in 2023, we had 220 open enforcement operations.

As of 1 October, we have 124.

But fewer investigations does not mean fewer outcomes.

In fact, we are delivering more.

We typically averaged between 20 and 25 enforcement outcomes per year.

In 2024, the number of enforcement outcomes was 41.

And in 2025, we expect to deliver over 30 enforcement outcomes.

And there’s more to come. We’re prosecuting more people for criminal offences than we have ever done.

And while some older cases need to be worked through, I can confidently say that investigations launched after April 2023 are being closed on much tighter timelines.

Seven recent investigations achieved a public outcome in 16 months or less, compared to a previous average of 42 months.

And fewer investigations are ending with no further action.

Historically less than a third of our enforcement operations ended with an FCA enforcement outcome. Today the majority do.

We are also prioritising redress for consumers who have suffered harm wherever we can.

In the last financial year, we secured over £442 million for investors and consumers through redress schemes, settlements, and civil proceedings.

The right thing in practice

Let me give you an example of what this looks like in practice.

In December 2024, we charged John Dance, WealthTek’s principal partner, with 9 criminal offences including multiple counts of fraud and money laundering.

In April this year, we launched an investigation into Barclays for opening a client money account for WealthTek without doing two simple things.

Check that the firm was permitted by the FCA to hold client money – it wasn’t.

And understand how WealthTek would use the account.

Clients deposited £34 million into the account, which should never have been opened in the first place.

We believe Dance helped himself to a chunk of that to fund his extravagant lifestyle – and Barclays’ lax controls allowed it.

I’ve said publicly that if you provide banking for fraudsters, we will scrutinise those controls with care.

Taking enforcement action against Barclays was the right thing to do.

But Barclays did the right thing, too.

They chose to co-operate with us extensively, which helped us conclude our investigation within three months.

That kind of speed is good for the wider system and Barclays alike.

They avoided the cost and strain of a much longer investigation.

And, given the timing, we pragmatically agreed to combine publication of this outcome with another anti-money laundering case involving Barclays.

Which helped them manage the risks around having two enforcement outcomes published in quick succession.

Barclays also agreed to voluntarily pay £6.3 million to WealthTek’s clients, helping to reduce the shortfall they are currently facing.

As a result, we reduced the financial penalty we imposed on Barclays.

They ended up with a penalty of £3 million, but it could easily have been twice that.

Sometimes doing the right thing can help you avoid a financial penalty altogether.

Our investigation into H2O found that the firm failed to carry out due diligence on investments; had few policies in place to manage potential conflicts of interest; and provided the FCA with false or misleading statements and documentation.

These are serious breaches, which would typically result in a substantial fine.

But H2O worked with us and agreed to make €250 million available to anyone whose investments were trapped and apply to cancel its authorisation.

So, we chose to forego a fine.

When firms do the right thing, we take notice – and they can benefit.

We took enforcement action against three firms last year in relation to their treatment of borrowers in financial difficulty.

The three firms operated voluntary redress schemes worth an estimated £354 million.

We reduced the amount of our financial penalties for all three.

HSBC, for example, invested £94 million in identifying and remedying issues with their treatment of customers, and paid redress of £185 million to over 1.5 million of them.

We reduced their penalty by more than half.

If you do the right thing – cooperate with us, take responsibility, and put things right for consumers – we will do the right thing too by reducing the penalty we impose.

But firms don’t need to wait until we open an enforcement investigation to do the right thing.

We use our supervisory powers in a way that offers firms a chance to do the right thing well before an investigation is opened.

If you take responsibility and resolve an issue early, you can avoid skilled persons reports, formal requirements, and enforcement referrals.

You’ve likely seen coverage of our motor insurance compensation scheme – which is a direct result of our supervisory work.

In 2022, we warned insurers not to undervalue cars when settling claims.

In 2023, we published a Voluntary Requirement, requiring Direct Line Group to review five years of claims outcomes and pay redress as needed.

And after an initial review last year, we found that some motor insurers had short-changed customers on claims.

An estimated 270,000 drivers are expected to receive £200 million in compensation.

Of that, £129 million has already been paid to nearly 150,000 customers.

Moreover, insurers re-evaluated their claims process and rewrote them in line with our Consumer Duty.

But there was no need for enforcement – because they’re making it right by the consumers they wronged.

But if you don’t put things right, we will act.

Starling had multiple chances to do just that.

First in 2021, when they agreed to restrict opening accounts for high-risk customers – but didn’t.

And again in 2023, when their automated screening system fell short and exposed issues within their financial sanctions framework.

After a 14-month investigation, we imposed a £28 million fine.

Digging in when necessary

I have said that the FCA would be pragmatic in its approach.

But I also promised to pursue investigations when it’s the right thing to do.

And when we dig in, we stay dug in until the bitter end.

A case recently reached its conclusion after more than a decade.

In 2008, Barclays entered into two advisory agreements with Qatari entities that involved payment to the entities in return for their participation in capital raisings.

But Barclays only disclosed one of the agreements to shareholders.

And they didn’t disclose the payments under the capital raisings or the connection to the Qatari entities’ participation in them.

That decision was reckless, lacked integrity, and went against Barclays’ obligations to treat the market and their shareholders seriously.

We first issued a warning notice in 2013.

The case was then paused until 2022, when we published our decision to fine Barclays £50 million.

Barclays chose to refer the case to the Upper Tribunal, before withdrawing the referral in 2024.

It took years, but the conclusion was a welcome one. In the end, we fined Barclays £40 million.

That dedication doesn’t stop with banks.

We stay dug in when it comes to insider dealing, too.

We must – these are some of our toughest, hardest-fought investigations.

Building a case is painstaking. It involves piecing together trading, communications, and banking data.

We’re also up against criminals who get creative with the reasons for their trading.

Moving a case through the system can take years, and a trial can take months.

But we commit to each one to keep our markets clean.

This year alone, we have convicted four individuals for insider dealing.

This includes the Korfuzi siblings, Redinel and Oerta.

As a research analyst at Janus Henderson, Mr Korfuzi had access to sensitive information and saw an opportunity.

In less than two years, the Korfuzis traded 13 stocks and made a profit of £960,000.

But we saw an opportunity, too.

After noticing suspicious trading patterns, we analysed large sets of data to uncover the crime.

In March 2021, the Korfuzis were arrested in a search operation in partnership with the Met Police – a reminder that we’re not the only ones watching.

After an 18-week trial at Southwark Crown Court, in which they pleaded not guilty, they were sentenced to a combined 11 years in prison.

Unlike the Korfuzis, another pair of siblings – Matthew and Nikolas West – did plead guilty to six instances of insider dealing.

At just under £43,000 total, their profits were significantly less than the Korfuzis’.

But their crimes were no less serious.

Because as professional investors, they knew what they were doing was wrong.

And we refuse to let financial criminals like the Wests undermine our markets’ integrity.

While both brothers received a suspended sentence, their decision to plead guilty reflects the quality of our investigation and the strength of the case we had against them.

Because, as I said, we stay dug in. And this includes making sure that crime doesn’t pay.

Mohammad Zina used inside information about potential mergers and acquisition to his benefit.

In February 2023, he was convicted of all 9 offences and sentenced to 22 months’ imprisonment.

But our action didn’t end there.

We refuse to allow criminals to keep any part of their illicit profits.

Which is why, in January of this year, we took further action against him and confiscated over £586,000 – all of his assets.

We’re seeing new risks, but we have the same resolve

I’ve said it before and will say it again.

If you flout our rules, try to avoid getting caught, and engage in criminal activity, you will pay the price.

As the world changes, so does the type of financial crime we’re up against.

We have long said that consumers who buy crypto should be prepared to lose their money.

Because crypto is uncharted territory: high risk and largely unregulated, with some players who don’t care about doing the right thing.

Earlier this year, we secured the UK’s first criminal sentence for unregistered crypto activity.

Despite being refused registration with the FCA, Olumide Osunkoya owned and operated a network of nearly 30 crypto ATMs.

Not only did he fail to carry out the checks necessary to ensure criminals weren’t using the ATMs to launder the proceeds of their crime.

High markups also ensured he made a profit from each transaction.

Like the West brothers, Mr Osunkoya knew what he was doing was wrong.

But he decided to avoid the glare of our spotlight by operating some of the ATMs under a false name and company.

In the end, Mr Osunkoya was sentenced to four years in prison.

But that’s not all we’re doing in the cryptoasset realm.

In July this year, as part of an operation led by the FCA and the Metropolitan Police, four Southwest London premises were searched, and we found and seized seven crypto ATMs.

Two people were arrested on suspicion of money laundering and running an illegal cryptoasset exchange.

That investigation is ongoing.

That same month, we announced that two people were sentenced to a combined 12 years in prison for cold-calling victims and selling fake crypto investments.

They defrauded at least 65 investors and stole over £1.5 million of their hard-earned money.

And in July last year, we announced that the FCA and Metropolitan Police arrested two people suspected of running an illegal crypto asset exchange.

While the investigation is ongoing, we believe over £1 billion of unregistered crypto assets were bought and sold through this business.

Finally, we fined CB Payments Limited, part of Coinbase Group, over £3.5 million for repeatedly breaching a requirement preventing the firm from offering crypto asset trading services to high-risk customers.

Work with us, or against us – it’s up to you

At the end of the day, firms have two choices.

To work with the FCA.

Or against us.

Whatever you choose, just know: we will be there regardless.

Now, I want to make it clear that we are always fair. Including when firms behave poorly.

But there are prizes for firms that choose to behave well.

If you choose to do the right thing from the jump, you’ll have nothing to worry about.

For example, you wouldn’t need to worry about a cooperation credit to reduce a penalty – because we wouldn’t take enforcement action in the first place.

I’ve spoken a lot about our public outcomes today, many of which have made headlines.

But there is a lot of private disruption work going on behind closed doors – and we’re more active than you might think.

We frequently get in touch with firms and individuals to let them know we’re on their case. We ask them to explain and, where concerns remain, do the right thing.

You don’t want to receive one of those calls or letters.

But if you do, the same expectation applies: be open with us, take responsibility, and do the right thing.

Conclusion

Most firms choose to follow the through line.

To do the right thing and work with us rather than against us.

Those are the ones that reap the benefits.

Now, we aren’t the all-knowing Wizard from Oz, and we may not get it right every time.

So, it’s right that firms can challenge us and escalate our enforcement decisions.

But we will dig in and back our findings when it is the right thing to do.

The question I’d like to leave you with is this: What’s the risk equation of not doing the right thing?

As I mentioned last month at AFME, compliance comes with costs.

But good compliance can save money.

And not doing the right thing is far more expensive.

Over the past year, we’ve found that 'doing the right thing' is more than ethical rhetoric.

It leads to better outcomes for consumers; healthier markets; and clearer, stronger enforcement.

But it also shows that this kind of standard demands work, integrity, and constant attention.

With this in mind, let us carry the through line of doing the right thing forward together as firms, individuals, and regulators.

So that when failures happen, they are addressed swiftly; when harm occurs, it is remedied fully; and misconduct is prevented as early as possible.